L’Oreal: Solid Beauty Demand, Innovation, and Tight Channel Ties To Fuel Top Line; Shares Overvalued

We are raising our fair value estimate for L’Oreal to EUR 376 (from EUR 336), which implies a 31 times multiple against our 2024 earnings estimate. The increase is driven by higher annual sales growth assumptions (7.0% versus 6.2% in the prior model), alongside faster growth (7% versus 6% previously) in earnings before interest (excluding tax) in the decade following the 10-year explicit forecast period. That said, we view L’Oreal shares as slightly overvalued, trading at an 8% premium to our intrinsic valuation, and would wait for a better risk/reward opportunity before building a position in this name.